While cleanup has begun in the aftermath of Hurricane Ida, the long-term impact of the storm on the plastics industry has yet to play out.
The biggest issue for processors who are customers of resin producers along the Gulf Coast is how shutdowns related to the storm will affect the availability and cost of materials.
"We hope not to have increase in prices, but being honest, we wouldn't be surprised if an increase was made in the price," one injection molder located in Mexico noted.
Molders from the U.S. West Coast to Midwest and Northeast expressed concern about delays in delivery of needed materials.
"Any supply disruption in this environment is bound to drive prices up and lead to more shortages. I think that's a real concern," Kevin Kelly, CEO of flexible bag maker Emerald Packaging Inc. of Union City, Calif., said.
"Past experience tells us, I think, that obviously we're going to be facing supply disruptions. The question is for how long," he said. "The answer should become more clear in the coming days."
Entergy Corp., the biggest electric grid company in Louisiana, said Sept. 3 that it has restored power to about a quarter of the nearly 1 million customers who lost service during the storm.
However, "extensive damage assessment by thousands of workers ... has thus far revealed more than 14,000 damaged or destroyed poles, 2,223 damaged or destroyed transformers and 155 destroyed transmission structures."
Officials in St. Bernard Parish, La., said Sept. 2 it could take up to a month to get everyone back online there. Dow Inc. has said it does not know when infrastructure improvements will allow it to restart its St. Charles facility.
Rail company Norfolk Southern said Sept. 2 that anyone expecting deliveries via rail service in the region could be looking at delays of up to 72 hours.
Rail shipments rely on a terminal in New Orleans that was being reopened on Sept. 2, Norfolk said in a news release on its website. It is attempting to reroute traffic through areas that were not affected.
The disruptions from Ida are only adding to production shortages that began in 2020 when two hurricanes — Laura and Delta — hit Louisiana, followed by ice storms that shut down production in parts of Texas in February.
"It seems to take weeks to restart facilities now, particularly because of the shortage of labor," Kelly said. "And we're already so far behind in production thanks to the Texas freeze [earlier this year] and other mishaps over the last nine months that any hiccups in the supply chain is going to lead to shortages, which is going to lead to higher prices," Kelly said.
"I think no matter what, no matter how small the disruption, any disruption is going to be bad enough to send ripples through the market that are not going to be good for plastic companies, and I mean processors when I say plastics companies," he said.
Emerald Packaging produces about 1.5 billion bags per year for the fruits and vegetables segments. The company uses both polyethylene and polypropylene.
Kelly also expressed concern that Ida came early in the peak U.S. hurricane season, and he expects more to hit the country in the weeks ahead. Any additional storms and their potential to impact resin production along the Gulf Coast will only serve to drive high prices even higher.
"We'll get two or three more hurricanes slamming the Gulf region over the next few months, and that will disrupt an already disrupted supply chain," Kelly said. "I think prices are going to continue to go up."
It seems to take weeks to restart facilities now, particularly because of the shortage of labor. And we're already so far behind in production thanks to the Texas freeze [earlier this year] and other mishaps over the last nine months that any hiccups in the supply chain is going to lead to shortages, which is going to lead to higher prices."
Emerald Packaging Inc.